Forex trading in Nigeria has become easier to get involved in during the past decade, which have also mostly seen strong economic growth and rising disposable incomes for many Nigerians despite post-2014 economic problems.
Nigerian Forex traders can learn here how to get started trading Forex, the correct approach to learning how to trade and deciding upon a profitable trading strategy for use, and which Forex brokers are most suitable.
Nigeria’s Financial Situation
Nigeria is home to over 186 million inhabitants, making it the most populous country in Africa and the seventh most populous in the world. The population is anticipated to exceed 250 million by 2050, while the country is already home to the third-largest youth population as well as the twentieth largest economy in the world.
A good measure of Nigeria’s increasing prosperity is the fact the gross domestic product per capita (per person) increased from $352 in 2001 to $3,222 in 2014 – an increase of approximately 900%! However, the figure has fallen sharply since 2014 to a little less than $2,000.
Despite Nigeria’s position as a relatively prosperous African country, most Nigerians would agree that getting by is neither easy nor simple. When you combine these challenges with the fact that it is not impossible to get some spare cash together, you can see why Forex trading continues to become more and more popular in Nigeria. Despite this plus the fact that Forex traders in Nigeria are believed to trade positions worth as much as $1.25 million daily on average, very few international Forex / CFD brokerages maintain a presence in Nigeria, so Nigerian Forex traders are in need of more impartial guidance, which can be found in this article.
How to Start Forex Trading in Nigeria
The essential requirements to get started are the same as in any other country. Traders need to have a computer or mobile device, a stable internet connection, trading capital (more on how much you will need later), and an account with a trusted Forex broker. Reliability of internet connections and electricity supplies have become considerably more reliable in recent years, especially in urban areas, which makes Forex trading easier. However, these factors mean traders in Nigeria should be careful to never execute a trade without inputting a hard stop loss, to prevent catastrophic losses in the event of a lost connection which cannot be re-established quickly.
Later sections in this article will discuss the practicalities of getting set up as a Forex trader. At this point, I emphasize that there is no point in trading Forex until you have a profitable trading strategy which you are psychologically ready to execute. You will not succeed in Forex with positive psychology alone, but a lack of psychological preparation can ruin the ability to successfully execute even a winning, profitable trading strategy. The lack of a sound trading strategy reduces Forex trading to gambling, with the odds stacked against the trader, and the eventual loss of the entire trading account.
The most proven trading strategy which has been proven to succeed over the years is a strategy which trades only in the direction of a strong trend, cuts losing trades short, and lets winners run. However, even with such a good strategy, there will be losing trades and losing periods, which the trader must be psychologically ready to accept as inevitable. By keeping risk small, a Forex trader can ensure survival through the losing periods and coming up ready to profit when the market turns profitable again.
It is important not to assume that Forex trading is easy money. It requires mental work and dedication.
Is Forex Trading Legal in Nigeria?
It is clear that Forex trading is legal in Nigeria if you trade your money for your personal benefit alone. This mirrors retail trading regulations in most countries. Raising capital from third parties for their benefit without a proper license to do so is illegal and, tempting as it may be, can get you into trouble if the third parties become dissatisfied and complain. Forex trading where you are managing other people’ money is extremely challenging psychologically. For these reasons, please trade only with your own money where losses are not catastrophic to your ability to pay your essential costs of living.
How Much do I Need to Start Trading Forex in Nigeria?
There are some Forex and CFD brokerages which require no minimum deposit and accept Nigerian residents as customers, so in theory at least, you can trade Forex in Nigeria with as little as $1. The problem is that due to issues of leverage and currency exchange with most Forex brokers not accepting deposits directly in Nigerian Naira, it is impractical to trade Forex with much less than $100 or its equivalent. Even $100 can be problematic due to trade size and leverage issues, so it is certainly true that something close to $500 will work better.
One Forex broker with expertise in serving Nigerian resident clients is FXTM, which, unusually for a major international Forex brokerage, has a physical presence in Nigeria. FXTM requires a minimum deposit from Nigerian residents of only ₦2,000.
Forex Brokers in Nigeria
The Nigerian Forex market went through a boom-and-bust cycle between 2004 and 2010, and a wave of Ponzi schemes swept the country during this period. This atmosphere prevented interest in Forex trading in Nigeria from taking off, but the picture has improved considerably since 2010 as a calmer financial environment and generally increasing prosperity began to prevail.
FXTM is the sole international Forex / CFD broker with a physical location in the country. Adding to its appeal is the Naira trading account, which makes it very simple for traders to manage their portfolios as no currency conversion are required in order to execute deposits and withdrawals to and from an FXTM trading account. The acceptance of bank wires from Nigerian banks is a further improvement to the services offered by FXTM to Nigerian resident traders.
While there are a few local Nigerian Forex brokers currently operating, if I were a Nigerian resident Forex trader, I would strongly prefer to open an account with an international brokerage instead of a local solution.
Other international Forex / CFD brokerages which service Nigerian residents include AvaTrade, Pepperstone, and IC Markets. Unfortunately, none of these brokers offer Naira accounts. Nigerian Forex traders will have to ensure that the brokers provide a payment processor catering to Nigeria, as currency conversions may pose a challenge.
Happily, the Forex market in Nigeria continues to strengthen and become a more attractive venue for international business, with the Central Bank of Nigeria (CBA) and the Securities and Exchange Commission (SEC) developing a stronger regulatory framework in recent years. More international Forex brokers are anticipated to follow FXTM into Nigeria, widening the choice for Nigerian Forex traders.
Best Forex Trading Platforms in Nigeria
The best Forex trading platforms for Nigerian resident traders are those offered through the Forex brokers mentioned in the previous section. The MetaTrader 4 platform is available at every broker mentioned, while the MetaTrader 5 and cTrader platforms are also available at some of them.
Forex Training in Nigeria
There are several institutions in Nigeria which claim to be able to train aspiring Forex traders for trading success and profit, in return for a fee covering the provision of this apparent education.
Although a few of these institutions may be sincere in their intentions, and the attempts of aspiring traders to invest in a proper trading education laudable, the fact remains that paying for Forex training in Nigeria is not be recommended. Simply put, you can find everything you need to know to become a successful and profitable Forex trader for free on the internet.
Aspiring Nigerian Forex traders will see a better return from time spent reading through this site and searching through google for good material than they will see from investing in Nigerian Forex educators.
When you do find material on Forex trading strategies, ask yourself whether any supporting historical data is shown to support the claims made. If not, ask yourself why not.
Best Time to Trade Forex in Nigeria
One advantage that can be enjoyed for free by everyone trading Forex in Nigeria is the time zone. Nigeria is one hour ahead of London, the global center of Forex markets.
The best time to trade Forex is the time during which there is the most volume and liquidity in the market. Studies have shown that the highest volume and liquidity in the Forex market occurs during the overlap between the London and New York sessions, with both remaining relatively high until New York closes for business at the end of its day. Happily, this means that the best time to trade Forex is between 2pm and 10pm Nigerian time. This is convenient for most Nigerian Forex traders, as it means it will be easy for most to be awake during this period, and most of this time is after normal working hours, meaning that Nigerians do not have to give up their normal day jobs in order to day trade Forex successfully during peak market hours.